COT Black: Futures Curve Twisting

By |2018-07-12T17:34:08+00:00July 12th, 2018|Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

There is an interesting, ongoing academic debate about what shape the crude oil futures curve “should” take. Quite naturally, it seems backwardation is the market baseline. Most people, I think, presume otherwise because of their familiarity with commodities like gold. Backwardation in that market implies a physical shortage. Unlike that precious metal, crude oil is [...]

COT Black: Bad News For Jerome, Swap Dealers Seem Really Convinced

By |2017-12-07T16:37:37+00:00December 7th, 2017|Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

US domestic stocks of crude oil continue to be quite high and now the futures curve is only a few pennies in the front month contract from being fully backwardated again. Contango is gone, which suggests that oil market is in sight of achieving some measure of balance. That anticipated equilibrium, however, is registering at [...]

Economics Through The Economics of Oil

By |2017-03-22T17:05:10+00:00March 22nd, 2017|Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

The last time oil inventory grew at anywhere close to this pace was during each of the last two selloffs, the first in late 2014/early 2015 and the second following about a year after. Those events were relatively easy to explain in terms of both price and fundamentals, though the mainstream managed to screw it [...]

The Narrative of Energy Inventories

By |2016-07-22T16:06:39+00:00July 22nd, 2016|Commodities, Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

While there is a direct relationship between the steepness of contango in the oil futures curve and the amount of crude siphoned from the market to storage, it is not an immediate one. When crude prices originally collapsed starting in late 2014, twisting the WTI curve from backwardation to so far permanent contango (of varying [...]

(Un)Welcome Back ‘Dollar’

By |2016-07-13T13:19:00+00:00July 13th, 2016|Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

On June 3, the May payroll report was released shocking convention by its “unexpected” weakness. It was, and so far remains, the worst headline number since 2009. Because the suggestion of a far weaker labor market than policymakers have been claiming undermined their whole economic narrative, “markets” immediately reversed course and bid as if there [...]

Reading Curves and Finding Only the Death of Money

By |2016-01-11T18:58:21+00:00January 11th, 2016|Bonds, Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

When analyzing the full and true nature of the dissonance between the idea of continued recovery and the financial markets’ scenario for something much worse you realize that this is not a new occurrence. In curve after curve, negativity has been building for years. Financial curves are important because they tell us the health of [...]

Physical Crude Demand Backs Fed’s IP Estimates, Not Fed’s Economic Outlook

By |2015-12-16T18:02:36+00:00December 16th, 2015|Commodities, Economy, Federal Reserve/Monetary Policy, Markets|

Like industrial production, the condition of oil inventory in the US was updated today in contradiction of the expectations driving Federal Reserve models expecting “transitory” weakness to simply pass into history. Unlike the virtual conditions for the FOMC, crude oil markets are obliged to respect both the eurodollar and the physical realities of physical commodities. [...]

No ‘Dollar’ Bottom Yet

By |2015-08-06T11:49:33+00:00August 6th, 2015|Commodities, Currencies, Economy, Federal Reserve/Monetary Policy, Markets|

By most accounts, crude oil prices are still nearing their March lows. That would suggest that this version of “dollar” turmoil might be yet working its way toward levels of disorder previously seen in that last episode. That is misleading, as even crude prices are appreciably more stressed now than they were in March. From [...]